Managing Fraud and Compliance: 4 Steps to Increase Your Financial Service Organization’s Confidence

As a financial services company, you know that internal policy and regulatory compliance is an integral part of every aspect of your business. Organizations like banks and insurance companies are tightly regulated and highly scrutinized under laws like FCPA, FINRA, and SOX, so their travel and expense (T&E) systems need to increase policy compliance, prevent fraud, and ensure regulatory requirements are met. Failure to do so is simply too costly, therefore forcing organizations to spend their budget differently to prioritize the reduction of fraud and other risks. And while many organizations have technology and auditing processes in place, a recent fraud and compliance survey among financial services professionals found that many are still uncertain about their current procedures.

What can you do to better manage compliance so that you can regain confidence when fraudulent behavior arises?

1. Auditing isn’t fun, but it’s necessary

With almost 20% of T&E expenses falling outside of policy, it’s no surprise that monitoring and auditing expense reports should be made a top priority. Whether you use an internal team or external auditors, having auditing systems pays off. Modern T&E factors such as more travel choices, increasing payment options, and the shift to employee-initiated spend are making it harder to detect fraud and enforce compliance. The Association of Fraud Examiners (ACFE) found that companies with anti-fraud controls in place experienced 52% lower instances of fraud, while 58% of companies detected fraud much faster.

2. Stopping fraud starts with the right approach

Catching fraud isn’t one-size-fits-all. A multi-facet approach is necessary to spot fraudulent activity. Determine if your procedure can withstand fraudulent behaviors by checking which actions your organization uses to manage your shield of defense:

• Require receipts for most, if not all, expenses
• Require approval of expense reports before reimbursement
• Have audit rules integrated into spend technology
• Use reports to help spot problems

If you checked all of the items above, then you’re on your way to fighting fraud with the right approach. Survey respondents found a combination of technology, policy, and managerial approvals is the most successful way to manage employee expenses and compliance.

3. Compliance extends beyond employee expenses

It’s always important for employees to follow the rules and comply with your organization’s internal expense policies, but not adhering to industry regulations can come with bigger fines and even larger reputational losses. Just this month, FINRA barred a former Merrill Lynch broker for falsifying receipts to qualify for $4,910 in reimbursement for childcare expenses.

When asking financial services respondents if they felt their company could be potentially at risk for global regulations and compliance, 43% answered “Yes” or “Not sure.”

Are you unsure that your organization’s solution for employee spend management has the ability to help safeguard you from violations in the event of a government audit? If so, it’s time to start acting as fines are detrimental for those who aren’t compliant. For example, a company violating FCPA standards can face can run up to $100,000 in criminal fines per violation and up to 5 years in prison time.

4. It’s time to move away from your manual processes

Automation and cloud technology are no longer out of reach, however, 41% of respondents reported that they still spend about 50 hours or more per month auditing expense reports. That’s 50 more hours per month that could be used for more strategic business initiatives.

With automation and artificial intelligence (AI) on your side as part of an integrated employee spend management solution, your organization could:

• Reduce expense report errors by up to 66%
• Shorten auditing time by as much as 90%
• Thoroughly audit 100% of expense reports

For more information on managing compliance and fraud visit our compliance and fraud solutions website.